A corporate name should have a legal ending, such as "Ltd.," "Inc.." or "Corp." The incorporation process includes an SS-4, which is an application needed to obtain an Employer Identification Number (also known as EIN). Almost there: please enter your email below to gain instant access. Some of these include special credit cards or wholesale discounts. This differs state by state, so it is a good idea to compare individual tax rates, which would apply for sole proprietorships, partnerships, or LLCs, with corporate tax rates. The certificate will have the registration number, name of the company and the date of incorporation. LLCs require a lot less record keeping than corporations do, provide some protection for the member’s personal property, and are burdened with fewer profit sharing requirements than corporations. Share it with your network! Each state has particular rules for corporations, but in general you'll need to register a company to be considered a corporation. If the documents for registrations are found in order, the Registrar will register the company and a Registration number is allotted. According to Section 9 of the Companies Act, 2013, these are the effects of registration of a company: 1. Unfortunately, there isn't an easy answer or formula that every new business can follow when selecting a business structure as part of the business planning process. These include a sole proprietorship, a limited liability company (LLC), a partnership, a cooperative, a corporation, or an S corporation. We'll also send you updates on new educational guides and success stories from the Shopify newsletter. The owners of an S Corporation still have limited liability, although not to the same extent as with a regular corporation, but pay taxes just once. Incorporating Your Small Business. Get free online marketing tips and resources delivered directly to your inbox. You Inc. Each state has a different process to get your business incorporated. Incorporation is defined as forming a new business structure that becomes a recognized person or entity under the law. In some jurisdictions when a member leaves the LLC, that LLC is dissolved. The reason you register a business is more for the business license, which is needed to operate in some areas. The process of registering your company as one of the business structures that we're going to outline below is different in each state. This is the business model most ecommerce merchants are using. 3. The definition of “doing business in a state,” like so many things, is different from one state to another, but there are common themes to … Creating a corporation also protects the business owner from losing personal assets if the company is sued. The risk here is that because there is no difference between the individual and the company, the individual is personally liable for everything the company does. UpCounsel accepts only the top 5 percent of lawyers to its site. What Is the Purpose of the Incorporation Process? Each state will have slightly different requirements for forming a partnership, but in many, if not most cases, it is a matter of filling out a form and paying a small fee. The date given by the Registrar in the certificate will be the date of incorpor… A limited partnership can limit both control and liability for specified partners. In fact, registration may positively affect your credit score. The Benefits & Costs of Incorporating Your Business. Often the members of an LLC pay payroll tax too. Conversely, LLC members will have to file additional forms for both federal and state taxes depending on the number of members, local laws, or even the LLC’s articles of organization. You’ll start receiving free tips and resources soon. The Registrar of Companies will then verify the documents submitted for registration. Of course there are disadvantages of incorporation as well - especially to small business owners. Formation happens right after incorporation happens. We hate SPAM and promise to keep your email address safe. Also, it can contract, sue and be sued by the said name. Company formation is where a series of decisions are made and documents and processes are adopted to reflect what was decided on. When opening a bank account for the company, it's necessary to have an EIN. It makes it easier and quicker for possible customers to find and research you. How to Register a Company in Kenya: 13 Steps (with Pictures) Here are a few you should consider: Now that you know the pros and cons of incorporating your business, lets go over your options. Incorporation is defined as forming a new business structure that becomes a recognized person or entity under the law. If there are any discrepancies found, concerned person was called to visit the Registrar’s office to rectify the errors in the documents. Being registered may also make it easier to get bank credit, but like with business credit cards, you should use caution. 3. Most online retailers start as sole proprietorships or partnerships, and only go on to incorporate when the company’s potential liability makes protecting personal assets attractive or when being able to sell shares of the business would help it grow. Registering is a cheap type of marketing, and is an easy process. Business registration does not offer the same protection of personal assets. However, be careful of the risks associated with certain business credit cards. If only one member forms a private company, it is called a single … No need to spend hours finding a lawyer, post a job and get custom quotes from experienced lawyers instantly. How to Find State of Incorporation for a Company, A separate credit rating is given no matter what the owners' personal score is, participant agreements for consultants, advisors, and Board members, other routine agreements for daily operations and governance. One possible example would be a labor union that operated an online uniform store, so that the union members could purchase work clothing at or near wholesale.